America’s 36.2 million small businesses are entering the largest ownership transition in modern US history, and the buyers are already in motion. New survey data from the 2026 State of Main Street report by Contrarian Thinking finds that nearly one-third of small business owners expect to transition ownership within the next five years, while 70% have no formal succession plan. The gap between the two numbers is where most of the wealth in the coming transfer will quietly disappear.
That is the framing from Codie Sanchez and her team at her Main Street business community, the Austin-based investment and advisory firm that produced the report. “We have a five to seven to maybe ten-year window to get these companies transferred,” Sanchez said. “If they don’t, they just go away.” The buyer side of that story is well-rehearsed. The seller side is the part that decides how much value actually crosses the table.
The Scale of the Transfer
The 2026 State of Main Street report, released May 12, 2026, combines proprietary survey data with figures from the US Small Business Administration, US Census Bureau, and Google Trends. It is the Austin-based firm’s third annual benchmark study on small business ownership in America, and it sets out to size the lower middle market and map the forces reshaping it. The report’s central demographic claim is that the ownership base is aging faster than the workforce it employs, and that the gap between intent and preparation on the seller side is wide. That is the engine of the transfer, and the rest of the report reads as an attempt to map its scale, its buyers, its financing, and its consequences.
The age curve runs through every other section of the data, and Sanchez has said the typical small business owner is closer to retirement than to mid-career. The demographic tailwind is real, and the supply of available businesses is going to keep climbing for the rest of this decade. That is what makes this moment a generational transfer, not a one-year story.
Geographically, the supply is concentrated in five states: California, Texas, Florida, New York, and Georgia, and that concentration shapes deal flow, regional search-fund activity, and SBA lending patterns. It also shapes which buyers are best positioned to act, since most acquisition searches start local.
The rest of the report is split between the buyer side and the seller side, and they are not in the same condition. The buyer side has a community being built, a financing stack being expanded, and a pipeline being trained. The seller side is, by the report’s own measure, mostly unprepared for what’s coming. The transfer will happen. Whether it happens on the seller’s terms is a separate question.
By the numbers:
- 36.2 million small businesses in the US
- 52% of small business owners are 45 or older
- 23% of small business owners are over 65
- 78.3 million Americans will be 65+ by 2040 (22% of the US population)
- About 10,000 Americans turn 65 every day
Why Acquisition Is Winning
The buyer pool has changed as quickly as the demographic curve. Sanchez calls the new arrivals “corporate escapees,” professionals worried about layoffs, economic uncertainty, and the long-term reach of artificial intelligence into white-collar work. Their pitch is simple: a business with customers, employees, and cash flow already in place beats a startup on almost every measure. Sanchez has pointed out that startup mortality runs high, and the calculus of buying over building looks different in a year when AI is reshaping white-collar job security.
Women are an outsized part of the shift. Sanchez has said women represented roughly 30% of her community several years ago, and today, participation is approaching 40%. Couples are also active, often with one spouse keeping a day job while the other runs the acquired business. For Sanchez, the math is blunt. “If what you’re trying to do is live a nice life, enjoy your time with your family, make a nice income, and have an asset that you can sell at the end as opposed to a job you can’t, it’s going to be more important that you buy a business than start one,” she said.
The trade is not new, but the tooling is, and online search interest in “buy a business,” “business broker,” and “SBA 7(a) loan” has been climbing, the report notes. Change-of-ownership loans have become one of the fastest-growing SBA categories. The buyers are no longer waiting for a portfolio of distressed sellers. They are running a steady pipeline.
The Money Behind the Deals
Capital is not the constraint most first-time buyers assume it is. Through May of fiscal year 2025, the Small Business Administration approved 78,078 loans totaling $37.3 billion, an 11% increase from the year before. The bulk of that activity runs through two channels. Both run through the SBA, but they are designed for different kinds of buyers and different deal sizes, and they have moved at very different speeds over the last 12 months.
Most acquisitions are funded through a combination of buyer equity, SBA-backed debt, and seller financing, where the seller receives a portion of the price over time. Sanchez has noted, in her list of eight rules for first-time buyers, that SBA 7(a) loans can finance up to 90% of a deal, with seller financing and assumed debt covering much of the rest. “Almost nobody buys a small business with a briefcase of their own money,” she wrote. The blend matters because it lines up incentives between buyer and seller well after closing.
The two main SBA programs for small business acquisitions differ sharply in scale. The 7(a) program, the SBA’s primary working-capital and acquisition channel, dwarfs the 504 program in approvals and dollar volume, in part because 7(a) deals are typically smaller and faster to close. The 504 program, built around long-term fixed-asset financing, sees fewer deals and larger average size, and is more often used for owner-occupied commercial real estate than for change-of-ownership transactions on its own.
| SBA Program | Approvals (FY2025, through May) | Dollar Volume |
|---|---|---|
| 7(a) | 69,089 | $18.7 billion |
| 504 | 5,093 | $6.7 billion |
Why 70% of Small Business Owners Have No Plan
That is the buyer side, and it is mostly working. The seller side, by the same report’s data, is not. The 2026 State of Main Street report documents that 70% of small business owners have no formal succession plan, citing survey data from Live Oak Bank. That gap shows up across the rest of the data.
Most business owners think because they’ve put in 10 or 20 years, they should get 10 or 20 years’ worth of valuation at the end.
Separate Gallup research, conducted in the fall of 2024 with support from JPMorganChase and the Ewing Marion Kauffman Foundation, sharpens the picture. Just over half of US employer-businesses are owned by people 55 and older, per Gallup’s 2024 Pathways to Wealth Survey, and 74% of those employer-business owners plan to sell or transfer the business at some point. The intent is high. The preparation is low. Among nonemployer owners, Gallup finds that 27% plan to close the business outright, and 40% are uncertain what comes next.
The mood on the seller side has cooled, too. The Principal Financial Well-Being Index put small business optimism at 5.59 out of 10 in its latest reading, down from 7.51 in 2024. Owners cited inflation, elevated interest rates, tariffs, and supply-chain disruptions as the biggest concerns, and only 17% said they believe the US economy is growing. Sellers aren’t in a rush.
What an Unready Business Loses at Sale
A business that depends on its founder for customer relationships, operational knowledge, and day-to-day decision-making trades at a discount. The penalty is structural, not emotional. Three things tend to be missing: consistent financial reporting (so the buyer can’t underwrite cash flow), documented systems (so the buyer inherits a job, not a company), and strategic planning (so the buyer has no map for the first 12 months).
Gallup’s analysis makes the same point from a different angle. The median employer business generated $80,000 in profits in 2023, which Gallup translates to a median valuation of “somewhere around $400,000 if sold” using a conventional formula. The same survey finds that employer firms that plan to sell or give away the business earn median profits of $100,000 and $85,000, respectively, compared with $20,000 for those that plan to close. Preparation shows up in the P&L.
The risk isn’t only financial. Employees, suppliers, and the surrounding community depend on a going concern. A forced sale, a fire sale, or a quiet closing under financial pressure costs the owner the legacy, costs the staff their jobs, and costs the town a piece of its commercial base.
What a Prepared Seller Does Differently
The fix is unglamorous. Sanchez points to three levers: improving financial visibility, reducing owner dependence, and strengthening operations. “In many cases, business value can increase substantially without any meaningful increase in revenue,” she said. The work is the kind that compounds for years before the listing goes up.
Van Essen’s summary of the report picked up a related signal from the seller side. Only 24% of sellers said price was their primary concern. 43% prioritized legacy. That mix changes how a deal gets structured, and it changes who shows up to bid. A seller with clean books, a documented operating manual, and a transition plan can attract a different class of buyer, including strategic acquirers, search funds, and individual operators with SBA financing in hand. A seller without those things can attract only a buyer willing to discount heavily for risk.
- Improve financial visibility. Consistent reporting, clean bookkeeping, and reviewed financial statements make the business legible to a buyer and a lender.
- Reduce owner dependence. Documented operating systems, succession for key customer relationships, and delegated decision-making turn a founder into an asset instead of a bottleneck.
- Strengthen operations. Diversified customers, recurring revenue, and scalable processes raise the multiple a buyer is willing to pay.
- Build a transition plan. A defined timeline, an identified successor or buyer pool, and a clear communication plan for staff and customers protect the business through the deal.
The bigger question is timing. Sanchez’s five-to-ten-year window isn’t a slogan. It is the runway a typical owner needs to lift a business from a founder-dependent operation to a transferable asset. Owners who wait until the year they plan to sell typically see a lower exit multiple.
Frequently Asked Questions
How many small businesses are expected to change hands in the next five years?
Nearly one-third of US small business owners expect to transition ownership within the next five years, according to the 2026 State of Main Street report from Contrarian Thinking. Gallup’s separate Pathways to Wealth Survey puts the longer-term intent even higher, with 74% of employer-business owners planning to sell or transfer their business at some point. The two figures measure different horizons and different samples, but both point in the same direction.
Why do most small business owners lack a succession plan?
Per the Contrarian Thinking report, which cites Live Oak Bank survey data, the majority of small business owners have no formal succession plan. Gallup’s 2024 work points to related reasons: nonemployer owners most often say they have no plan because the business is too small. For employers, the gap is less about reluctance and more about timing, since most intend to sell but have not built the systems a sale requires.
What financing is available for buying a small business?
The most common stack combines three sources: buyer equity, SBA-backed debt, and seller financing. The Small Business Administration approved 78,078 loans totaling $37.3 billion through May of fiscal year 2025, an 11% increase year over year. Sanchez has noted that an SBA loan can finance up to 90% of a deal, with seller financing and assumed debt covering much of the rest. Almost no one writes a single check for a small business.
How can a small business owner prepare for a sale?
Sanchez points to three areas: improving financial visibility, reducing owner dependence, and strengthening operations. The goal is to move the business from one where the founder is the system to one where the system can run without the founder. The work is multi-year, which is why Sanchez and others recommend starting well before the year a sale is planned.
What is the Silver Tsunami?
The Silver Tsunami is shorthand for the wave of business transitions driven by an aging ownership base. About 10,000 Americans turn 65 every day, and a meaningful share of them own small businesses, by Sanchez’s count. Per the Contrarian Thinking report, 78.3 million Americans will be at or above retirement age by 2040, or 22% of the US population.
Disclaimer: This article is for informational purposes only and does not constitute financial, investment, legal, or tax advice. The figures cited reflect the 2026 State of Main Street report and supporting research as of publication in June 2026. Small business transactions carry material risk, including loss of principal, illiquidity, and operational disruption. Buyers and sellers should consult qualified professionals, including a Certified Exit Planning Advisor (CEPA), a CPA, and an attorney, before committing to a transaction.
